05/08/2016 BBC Business Live


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Hello, this is business live. The road to Rio has been fraught with


doping scandals and political and economic crises and of course the


Zika scare but it is set to be the biggest money games in history. That


is our top story. Business bets big on Brazil, we will


hear from the big boss Nissan on why spending millions of dollars on


sponsoring these games was the right move. Also, if you build it, they


will come. One retirement home in London has dug a tunnel to Harrods


with all the elements. And a quick with all the elements. And a quick


look at the markets, you can see they are up. As well as the big move


of the Bank of England yesterday. And two months after the Europeans


at the bank started buying corporate bonds, the Bank of England adopts a


similar strategy. We will be assessing whether this really


tackles the underlying causes of lacklustre growth. Mark Carney is


throwing everything but the kitchen sink at the economic future he


clearly sees as risky so we want to know if it is as bad as all that or


are there any positive benefit from the decision to leave the EU.


Welcome to the programme, a lot going on, we have that Friday


feeling! We start in Brazil -


where as you have been hearing the Rio 2016 Olympic Games will open


in just a few hours time. But it's not just a big


moment for sport - it's a lucrative


money-making operation too. Rio is set to be the biggest


money Games on record. Let's put it in some context


for you. Back in 2008


the Beijing Olympics pulled in broadcast rights and corporate


sponsorship worth almost That figure was blown


away four years later Now -


the final figures for Rio 2016 are not in yet but it looks


set to top $9.3 billion in commercial rights -


making it the richest Games ever. That's despite a barrage


of negative publicity - from political and economic


crisis in Brazil - to the Zika virus outbreak -


to the doping scandal overshadowing One of the companies investing


heavily in Rio 2016 is car It is a major sponsor of the Torch


relay, and it's CEO, He has been speaking


to our South American business correspondent Daniel Gallas


about paying so much Without any doubt it is the right


decision because the objective from the beginning was to give more


awareness to the Nissan brand. At the moment we are starting our


offensive in the country and Latin America. The fact that we took this


decision when the market was nearly 3.6 million cars a year and it is


now nearer to 2 million cars a year does not change anything that we


want to build a much higher awareness of our brand and product


in a country which without any doubt will continue to be one of the major


markets in the world and where our awareness is still behind some of


the top players. It does not change anything, the fact that the market


is down and hopefully in two or three years down the road it will be


much higher. It is one of the things we were expecting. Awareness is the


reason for which we are participating in the Olympics. The


Olic it is with tell us why you think this will be


the biggest moneyspinner we have seen. The Olympics is a unique


product coming round every four years. You get the Winter Olympics


in the middle which is an added bonus on that TV package! Is it a


sporting festival, people all around the world are watching it, the


television audience is something like 3.5 billion and sponsors want


to be involved and there are a limited number of positions so they


paid top bucks. I don't know if we know yet how much cost Brazil to put


it on but if it brings in $9.3 billion, does a lot of that end up


in the Brazilian economy or not? Most of it doesn't. What happens to


the sponsorship and TV broadcasting rights revenue, they go to the


International Olympic Committee. About 10% of that is used to pay for


the IOC itself including the nice hotel that the president lives in!


The rest goes down to the National sporting federations and


international adoration and in theory to the athletes but by then


it is quite diluted. As far as the host country is concerned, they are


meant to make their money back through local sponsorship like the


torch relay and getting tourists in. Rio is a good destination anyway and


it is ebbing for a bonanza from the Olympics but the government has to


pay a lot of money and in the case of London, the total cost was


somewhere in the region of $12 billion which is a lot money to


back. We're not sure how much this will have cost them but we note that


when they bid for this in the first place, the Brazilian economy was in


a completely different place and since then, whatever the cost, we


know it has spiralled, up by 50% and construction has been very difficult


to get it on time so I wonder if Brazilians might be thinking if we


really need this at a time when the economy is in crisis. That is always


the risk with in an Olympics, you bid for it with great hope years in


advance and everybody is very enthusiastic. It falls in a


recession like this, it can be rather unfortunate. You have to look


back at Athens 12 years ago to see that a lot of money was spent on


infrastructure, it did not seem to benefit their economy very much and


many of the venues were left to become derelict. The New York Times


has an article about that, whether the spirit has gone and the recent


study amongst Brazilians, 60% or study amongst Brazilians, 60% or


more don't support it. Thank you. Apple is going to start offering


rewards for finding security flaws. It will pay hackers


$200,000 if they find They're not the only


ones doing this. AT, Facebook, Google, Microsoft,


Tesla Motors and Yahoo In fact, in March, Facebook paid


$10,000 to a 10-year-old boy in Finland who found a way


to delete user comments New York State's financial


regulator has requested a meeting with Goldman Sachs


about its fundraising for Malaysian That's according to anonymous


sources cited by The Wall Street giant's work


with 1MDB is under the spotlight after a series of international


investigations into the fund. The number of people in the UK


being hired for permanent jobs has fallen by the fastest rate


for seven years. The BOE forecast this week


that the unemployment rate will rise to 5.6% from 4.9% over


the next two years. In the last few months we have had a


lot of comments about the RBS share price and we will have more on that


later but there have been big falls and we have already seen that the


share price is falling. And a bit from William Hill, gambling


companies are doing well. This is William Hill which is a big gambling


house here and its pre-tax profits jumped 28%. I am a bit sensible


about it but it was the football, nobody was expecting that result.


People made some big money. Yesterday, the Japanese carmaker


Toyota reported a 15% The BBC's Tim McDonald has been


looking at how investors reacted I don't imagine they liked it. You


would think that, a 15% drop in profits does not sound good but


their shares went up initially 3.2%. It is all about expectations and


this time round to it were predicting $5.4 billion which is


more than many people were tipping. They have been softening up


investors since the last quarter saying that the land cruiser has


left the motorway and things might be bumpier and that is down to a


stronger yen which has gained about 16% against the dollar in the first


top of the year. A lot of Toyota cars are made in Japan and a lot


head overseas where a stronger yen makes them more expensive and cut


into the valley of the earnings that come back to Japan. It is still a


profitable company and investors today did not think they were


looking at a car crash. That is always a surprise! Have a great


weekend. Most Asian stock markets rose


on Friday after the Bank of England launched a larger-than-expected


post-Brexit stimulus package that An overnight rally in crude oil


prices also sharpened investors' risk appetite,


but caution before those big US jobs We were expecting about 180,000 new


jobs to be created for the month of July.


The BoE said it would take "whatever action is necessary"


to achieve stability in the wake of Britain's vote


I mentioned the US. Let's find out what will be making the headlines.


about what's ahead on Wall Street Today.


From now until November anything that refers to the strength of the


US economy, you can expect it will be fodder for the American


presidential elections so if Friday's jobs report is weak we can


expect that the Republican candidate will say that this country needs


change and it needs Donald Trump. If the jobs report is strong, you can


expect that Democrats will say that the economy is getting better


because of Democrat and you should vote Clinton. So what can we expect?


Many economists believe that the jobs report will show that the


labour market is healthy and that the unemployed rate may fall even


further and that wages will increase ever so slightly. That is what the


US Federal Reserve will be looking at when it considers whether it


should raise US interest rates. Let's start with this jobs data. In


a way, the number is not as important as what happens to wages


because that is what they will be looking at. It is very much a


combination effect so we have to see what the headline employment number


is and the markets assume it will be a bit below 200,000 but if it was


above that then it might cause the market to row back a little bit from


the post-GDP reaction we saw last Friday. If we see average earnings


higher, and a reasonable headline figure, we might see a market coming


back to thinking, is the Fed still in play? If we get a good jobs


number given what you have mentioned with the weaker growth from the US,


we will all still be confused. Will they or won't they? Not long ago


they were still saying two rises by the end of the year. We are in a


scenario where the Federal Reserve are finding it easy to find reasons


not to hike rates. The post-Brexit world has added to the uncertainty.


If we see the deployment market remaining relatively robust, which


has an impact into consumption over time, that still leaves the


possibility of a rate hike before the end of the year, probably after


the election. And if that is the case, that might have an impact in


terms of how the US dollar trades and also into the broader market


actives and risk appetite. Thank you. You will be coming back later


to go through the papers. We will be talking the tunnel into Harrods! Not


for you and me! Still to come, I was dog moved from the Bank of England,


we will assess what the rate cut means for the British and world


economies. The you are with Business Live from


BBC News. The big story in the UK, the Royal Bank of Scotland, which is


largely owned by taxpayers as revealed it has made a huge loss of


about ?2 billion of the year. ?2 billion in six months. A bigger loss


than the city expected and RBS's chief executive Ross McEwan blamed


legacy issues which he said were still being sorted out. Let's go to


the news room because Sebastien Crispin joins us. Just how bad? 2


billion sounds a lot, but how bad in the grand scheme of the numbers?


Fair to say it's a disappointing set of results per Royal Bank of


Scotland. The ?2 billion lost the first half of 2016, let's compare to


the same period in 2015. The bank reported a ?179 million loss so the


difference between then and now is significant. On top of that, the


Royal Bank of Scotland is saddled with 1.3 billion of conduct and


litigation costs. And it means the bank is spending a lot of money


funding of legal actions and says the staff behaved inappropriately.


Not a good set of results and the falling share price is a testament


to that. The boss, Ross McEwan, is about half way through a big


restructuring plan in the company. What now for RBS? How can it


progress through the restructure? Important to take a step back and


know that this is not a good time for banks in general. We have seen


banking stocks rocked over recent weeks and a string of disappointing


results coming out the sector. On top of that we had the results from


the EU stress test which was an exercise by regulators to test the


resilience of the banking sector and a lot of banks, including RBS, did


not do well. It's a difficult time generally for banks. RBS is in a


difficult situation. In 2008, it was bailed out by the government and is


73% owned by the taxpayer, so it's in a particularly tough situation


and it's having to rethink the strategy of going forward. Great


stuff, we appreciate it. We will talk to you again. His first time


with us. He was good, wasn't he? One more story, this is Beltway, the


house-builder and it says it expects housing revenue to increase by 27%


with a bar saying it's too early to assess the effect of the EU


referendum result. But he says it's been encouraging trading. A very


robust balance sheet, he says. Go on, I was going to do it. You are


watching Business Live, and Rio is said to be the biggest money games


in history ever, despite the barrage of negative muscle that publicity.


The opening Seredina -- in the opening ceremony is happening at


midnight, a great time per us UK. You can go out Friday night, come


back and watch it. I might go out and drink and not remember it. Let's


have a look at the markets. Reassured, I guess about the Bank of


England move in some ways. Yes, a little bit and the falling value of


sterling against the dollar will lift the FTSE 100 because so many of


those companies are listed there and they make their profits outside of


the UK so it boosts the value. When they bring the money back in the UK


they get more bang for their buck. OK. In the last 24 hours the boss of


the Bank of England Mark Carney launched a huge fiscal programme to


stave off a Brexit induced recession, so what have they done?


We know interest rates have been cut from 0.5% to a quarter of a percent.


It is the lowest interest rate in history, its 322 year history and


the first that we have seen in seven years. So to make sure that the cut


is passed on, the bank has introduced a funding scheme. You


might be asking what that is. With the rates now so low banks are going


to find it harder to make money off the difference between the rate at


which they offer borrowers and savings, so as we saw in 2008, weak


banks are bad news the economy. This scheme will allow banks to borrow


money on the Bank of England at a lower rate than they would offer


savers for the same cash. One would imagine it will be near 0.25%. You


would hope. The central bank will also increase its quantitative


easing programme which basically means it's going to be creating this


electronic money and will buy up debt to the tune of $70 billion


which works out at around ?70 billion, $90 billion. We have Duncan


Withers, who is the head of the Resolution group. Good to see you.


Let's start with the idea of the new quantitative easing and corporate


bonds. It is clearly a favourite tool for the banks to tackle


lacklustre growth across the world. There is a lot of scepticism, given


the cost of borrowing at the moment that these measures will have any


impact. These were new moves from the Bank of England but similar


something that the European Central Bank did earlier this year. And this


is the global story at the moment. We are seven years into a recovery


of recession around the world and it's been a weak recovery and we are


relying more on Central banks to keep it going and they are doing


more and more extraordinary things. In some central banks you have a


negative interest rates. The boss of the Bank of England does not like


that. He said that a few times. Here is the thing, with the quantitative


easing programmes we've seen here and in other countries, the whole


idea is to get the money out in the economy and it ends up to Mary Smith


and Joe Bloggs, but it doesn't end up to the right people. It ends up


in the stock markets. Some central banks have been open about this.


They are saying they are trying to boost the price of financial assets


and that helps the economy in two ways. It makes it easier for


companies to raise money and that the holders of the assets feel


better off and go out and spend more. That's a way of stimulating


the economy but boosting asset prices as a distributional


consequence and in simple terms, it benefits people who hold assets, who


are already richer. They could be holding them in pension funds,


stocks and shares, and I want to ask you whether these programmes we are


seeing like quantitive easing really go to address the underlying


structural issues we have got in the global economy and whether or not


instead they make it more attractive to make excessive risks. There is an


issue there. Central banks why not also save assets are pushed the


price of those up and it means the return on them is low so investors


around the world have been forced to buy more risky stuff than normal.


That is what central banks are trying to do, push money into risky


assets to get the economy moving. There is a potential downside


because people are running more risk than they want to be. I think we


have relied very heavily on monetary policy and it might start to change.


We have seen Canada under a new government spending more. Japan has


launched fiscal stimulus. We might get a fiscal stimulus in Britain and


there may be a shift under way in the world towards more government


spending and less reliance on central banks. Duncan, thank you for


coming in and taking us through it. In a moment we will be taking a look


at the business but here's a reminder of how to get in touch. The


Business Live pages where you can stay ahead with all the breaking


business news. We will keep you up-to-date with insight and analysis


from the BBC team of editors around the world. And we want to hear from


you as well. Get involved on the Business Live web page. On twitter,


and you can find us on Facebook at BBC business news. Business Live on


TV and online whenever you need to know. Jeremy is back in the chair


and we will. -- we will crack on with the story of the retirement


home in London which is planning a tunnel from it to the Harrods


department store. It shows you where the level of wealth is. In the


context of your previous discussion, those with assets benefiting from


the QA process, the older generation are those that generally have higher


levels of assets. They clearly have greater levels of wealth and are


trying to tap into this by the tunnel into the shop. Older


generations are also savers, and what we see with a cut in interest


rates, already they are dismal and they will be moored dismal, saving


rates. They will continue to go down, so the by-product is that


hopefully that will encourage to spend because you are getting less


of return on your funds but your funds are actually going down in


real terms because inflation will go up because of the fall in sterling.


The idea is to encourage a bit more spending which just means the


economy will be even more unbalanced. We are expecting to hear


about the credit rating of Turkey from Moody 's. Extraordinary that


investors are rushing to Turkey despite what we heard about what is


going on. In the short term, because investors find it difficult to get


returns in other markets you have these episodes where you see a great


deal of uncertainty and markets move and then you get this rush of


investors moving back in. You try and get the returning Turkey and the


nominal yields are approaching nine or 10% but that is something we


don't see elsewhere. That is true. So a chance to make some money. As


long as you get there quickly enough. Thanks, Jeremy, have a great


weekend. That is it from Business Live. Plenty more throughout the


day. See you soon. Today is looking warm across the


board, mainly because we have lost the strong winds of


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